Micron Technology Inc. shares rallied to lead gains among chip maker stocks Wednesday after another analyst declared the memory-chip glut of 2019 over and boosted his rating on the stock.

Micron MU, +3.72% shares rallied 3.9% to $59.50, after touching an intraday high of $61.19, and were on track for their highest close since June 13, 2018, when they finished at $60.05 and the memory-chip market was in the middle of its most recent boom. Micron led gainers on the PHLX Semiconductor Index SOX, +1.37%, which rose 1.3% Wednesday.

On Wednesday, UBS analyst Timothy Acuri raised his rating on Micron to a buy from neutral, and hiked his price target to $75 from $47, on the basis that the memory market is setting Micron up to be able to “materially outperform over a sustained period of time.”

“We consider both the cyclical and structural aspects to both MU and the memory industry as a whole and conclude that MU is in a much stronger position in a structurally better industry on the cusp of a cyclical upswing that, for DRAM, should last deep into C2021,” Acuri said.

Micron specializes in DRAM and NAND memory chips. DRAM, or dynamic random access memory, is the type of memory commonly used in PCs and servers, while NAND chips are the flash memory chips used in USB drives and smaller devices such as digital cameras.

Acuri said he sees “clear signs that the industry is moving toward a somewhat undersupplied environment” in DRAM and expects a “full” seven quarters of undersupply that will extend into 2021. For NAND, Acuri expects the market to be “somewhat” undersupplied in the first half of 2020 with “the industry tipping back into moderate levels of oversupply” in 2021.

Additionally, with data centers resuming purchases after last year’s lull, as evidenced in recent results from Intel Corp.INTC, +0.07% and buzz leading up to Nvidia Corp.NVDA, +1.17% earnings on Thursday, DRAM sales stand to see a big boost.

“After a pause in H2:2018/2019, we are seeing indications that hyperscalers are resuming purchases of server DRAM as inventories have normalized,” Acuri said. “Our field work indicates that hyperscaler procurement accelerated in December 2019, with robust forecasts for 1H:20.”

Over the past 12 months, Micron shares are up 47%, with the bulk of that growth coming in the past three months. That compares with a 46% rise in the SOX index, a 23% rise in the S&P 500 index SPX, +0.59% and a 31% gain in the tech-heavy Nasdaq Composite Index COMP, +0.78%.

Of the 34 analysts who cover Micron, 26 have overweight ratings, five have hold ratings, and three have underweight or sell ratings, along with an average target price of $66.46, according to FactSet data. In late December, 35 analysts covered the stock with 18 buy ratings, nine hold ratings, and three sell ratings, along with an average target price of $57.77.

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